WESTLAKE VILLAGE, Calif., May 29, 2008 /PRNewswire —
Despite an economy
affected by a stagnant housing market, decreasing home values and upheaval
among lenders, overall customer satisfaction with the home equity line of
credit/loan origination process has improved since 2007, according to the J.D.
Power and Associates 2008 Home Equity Line/Loan Origination Study(SM) released
today. Overall customer satisfaction in 2008 averages 780 on a 1,000-point
scale, increasing by 14 points from 766 in 2007.
"Ongoing troubles in the housing and mortgage lending markets have had the
effect of lowering customer expectations around the home equity loan and line
of credit origination process. Since homeowners may have feelings of
uncertainty toward property values and lenders, they may associate the loan
application process with hassle and frustration," said Tim Ryan, senior
research director of the finance and insurance practice at J.D. Power and
Associates. "As a result, customers who obtained a home equity product report
being more satisfied with the process in 2008, compared with 2007, even though
measures of service — such as the average length of time for application
approval — have remained consistent during the past year."
Now in its third year, the study measures customer satisfaction with home
equity lenders. Four factors are examined to determine overall satisfaction.
They are, in order of importance: application/approval process (36%); closing
(35%); loan officer/representative or banker (26%); and problem resolution
(4%).(1)
For consumers shopping for a home equity loan or line of credit lender,
closing costs and price — including interest rates and fees — are
particularly important considerations. Understanding and comparing terms from
various lenders may help homeowners obtain a better deal.
"One tip for consumers who are shopping for a home equity loan or line of
credit is to contact several lenders and allow them to compete for your
business," said Ryan. "Shoppers may be able to secure lower fees and points
and better interest rates as a result. In addition, shoppers should make sure
they completely understand the terms of their loan before signing the closing
papers. If anything is unclear or unexpected, shoppers have the right to
receive an explanation, as well as to re-negotiate the terms or to walk away.
Another approach is for shoppers to work with their existing lender. Through
this lender, shoppers may be able to consolidate multiple accounts, as well as
negotiate for — and obtain — a competitive interest rate."
Bank of America ranks highest in satisfying customers who recently
obtained a home equity product, receiving an overall index score of 811 and
performing particularly well in the application/approval process factor.
SunTrust (809) and Wachovia (807) follow Bank of America in the rankings.
SunTrust performs particularly well in the loan officer/representative or
banker factor while Wachovia performs well in the closing factor.
"Bank of America, SunTrust and Wachovia all perform well in specific areas
that are important to customers, including having problem incidence rates and
application approval times that are better than the industry average," said
Ryan. "With high levels of service provided by these and other lenders who
have performed well at fulfilling customer expectations, now may be an
opportune time for homeowners who qualify to apply for a home equity product.
However, those homeowners with lower credit scores or who are in an area where
property values have declined may have a more difficult time qualifying for a
home equity product under the current circumstances."
Customer Satisfaction Index Ranking J.D. Power.com Power Circle Ratings
(Based on a 1,000-point scale) For Consumers
Bank of America 811 5
SunTrust 809 5
Wachovia 807 5
Chase 791 4
Industry Average 780 3
WaMu/Washington Mutual 773 3
CitiMortgage/Citibank 762 2
National City Bank 756 2
Wells Fargo 755 2
Countrywide Home Loans 728 2
The study finds that there are five key performance indicators for lenders
that are critical to satisfying customers. These indicators include: approving
applications and providing customers with access to their funds quickly;
setting and meeting expectations during the application approval process;
avoiding surprising the customer during the origination process; being
versatile and flexible in the location of the closing; and being mindful of
the pitfalls of using a mortgage broker.
The study also finds that lenders that perform well in these performance
indicators will increase their percentage of highly committed customers, who
are more than twice as likely to recommend their lender to others and to reuse
their current lender for their next home equity or mortgage product. In turn,
this growth can help these lenders outperform their competitors over time.
The 2008 Home Equity Line/Loan Origination Study is based on responses
from 3,176 customers who originated a home equity line/loan between February
2007 and January 2008. The study was fielded in February and March 2008.
SOURCE J.D. Power and Associates
